ITO, Kannur v. Sri.Rajeev Thomas, Kannur

ITA 398/COCH/2013 | 2006-2007
Pronouncement Date: 04-10-2013

Appeal Details

RSA Number 39821914 RSA 2013
Assessee PAN ACMPR3558E
Bench Cochin
Appeal Number ITA 398/COCH/2013
Duration Of Justice 3 month(s) 28 day(s)
Appellant ITO, Kannur
Respondent Sri.Rajeev Thomas, Kannur
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Department
Bench Allotted DB
Tribunal Order Date 04-10-2013
Date Of Final Hearing 25-09-2013
Next Hearing Date 25-09-2013
Assessment Year 2006-2007
Appeal Filed On 06-06-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIB UNAL COCHIN BENCH COCHIN BEFORE S/SHRI N.R.S.GANESAN JM AND B.R.BASKARAN AM I.T.A. NO.398/COCH/2013 ASSESSMENT YEAR : 2006-07 THE INCOME TAX OFFICER WARD-2 KANNUR. VS. SHRI RAJEEV THOMAS PWD CONTRACTOR NADUVANAD MATTANNUR KANNUR-670 702. [PAN: ACMPR 3558E] (REVENUE-APPELLANT) (ASSESSEE-R ESPONDENT) REVENUE BY SMT. S. VIJAYAPRABHA JR. DR & SHRI M. ANIL KUMAR CIT(DR) ASSESSEE BY SHRI T.M. SREEDHARAN SR. ADV. DATE OF HEARING 25/09/2013 DATE OF PRONOUNCEMENT 04/10/2013 O R D E R PER B.R.BASKARAN ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DATED 13-03-2013 PASSED BY THE LD. CIT(A)-II KOZHIKODE AND IT RELAT ES TO THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE IS ASSAILING THE DECISION OF LD. CIT (A) IN DELETING THE ADDITION OF RS.44 25 667/- ASSESSED AS UNEXPLAINED INVESTMENT U /S. 69C OF THE ACT. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS A CIVIL CONTRACTOR. THE ASSESSMENT WAS ORIGINALLY COMPLETE D U/S 143(3) OF THE ACT ON 21.11.2007. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE DECLARED GROSS CONTRACT RECEIPTS AT RS. 1 14 66 342/-. SUBSEQUENTLY IT WA S NOTICED THAT THE ASSESSEE HAS ACCOUNTED FOR ALL THE GROSS RECEIPTS AS CASH RECEI PTS AND ACCORDINGLY EXPLAINED THAT . ITA. NO.398/COCH/2013 2 THE EXPENSES AND INVESTMENTS WERE OUT OF THE SAME. THE ASSESSING OFFICER NOTICED THAT OUT OF THE GROSS CONTRACT RECEIPTS OF RS. 1.14 CROR ES REFERRED ABOVE THE ASSESSEE HAS RECEIVED TWO CHEQUES AGGREGATING TO RS.44 25 667/- AND THEY WERE EN-CASHED ONLY IN THE SUCCEEDING FINANCIAL YEAR ONLY. HENCE THE AS SESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE COULD NOT HAVE UTILISED THE AMOUNT EQUIVAL ENT TO THE ABOVE SAID TWO CHEQUES FOR MEETINGS HIS EXPENSES/INVESTMENTS. ACCORDINGLY THE ASSESSING OFFICER RE-OPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT AND TREATED THE ABOVE SAID AMOUNT OF RS.44 25 667/- AS UNEXPLAINED INVESTMENT OF THE ASSESSEE AND ASSESSED THE SAME. 4. BEFORE THE LD. CIT(A) THE ASSESSEE SUBMITTED TH AT THE BANK BALANCE WAS SHOWN BY THE ASSESSEE BY EXCLUDING THE TWO CHEQUES REFERR ED ABOVE. IT WAS ALSO SUBMITTED THAT THE GROSS CONTRACT RECEIPTS DECLARED BY THE AS SESSEE ON THE BASIS OF TDS CERTIFICATES ISSUED BY THE PWD INCLUDED THE AMOUNT OF RS.44 25 667/-. ACCORDINGLY IT WAS SUBMITTED THAT THE ASSESSEE HAS DISCLOSED THE C ONTRACT RECEIPTS CORRECTLY AND HENCE ADDITION OF RS. 44 25 667/- WAS NOT JUSTIFIED. THE LD. CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT THE ASSESSING OFFICER STATED THAT THERE IS NO SUPPRESSION OF CONTRACT RECEIPTS AND FU RTHER THE EXPENSES DEBITED TO P&L ACCOUNT WERE CERTIFIED IN THE AUDIT REPORT. IN VIE W OF THE SUBMISSIONS MADE BY THE ASSESSING OFFICER IN THE REMAND REPORT THE LD. CIT (A) DELETED THE ADDITION. AGGRIEVED THE REVENUE HAS FILED THIS APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE GROSS C ONTRACT RECEIPTS SHOWN BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT INCLUDES TH E AMOUNT OF TWO CHEQUES AGGREGATING TO RS. 44 25 667/- AND SAME TALLIES WIT H THE TDS CERTIFICATES FILED BY HIM. HENCE THERE IS NO SUPPRESSION IN THE TURNOVER REPO RTED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT. HOWEVER THE ABOVE SAID TWO CHE QUES HAVE BEEN ENCASHED ONLY IN THE SUBSEQUENT YEAR. SINCE THE ASSESSEE HAD SHOWN THE ABOVE SAID AMOUNT OF RS.44 25 667/- AS CASH RECEIPTS THE AO HAS TAKEN T HE VIEW THAT THE SOURCES TO THE . ITA. NO.398/COCH/2013 3 EXTENT OF THE ABOVE SAID AMOUNT COULD NOT HAVE BEEN AVAILABLE WITH THE ASSESSEE TO INCUR EXPENSES/INVESTMENTS. 6. WE NOTICE THAT THE LD CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF THE REMAND REPORT. IN THE REMAND REPORT SUBMITTED BY THE AO D URING THE COURSE OF APPELLATE PROCEEDINGS THE AO HAS STATED AS UNDER:- (I) ALL THE GROSS RECEIPTS WERE CREDITED IN THE IN COME AND EXPENDITURE ACCOUNTS AS ON 31.3.2006 AND THERE IS NO SUPPRESSION OF CONT RACT RECEIPTS AND CONTRACT RECEIPTS WERE ACCOUNTED THROUGH THE BANKS DECLARED TO THE DEPARTMENT. (II) EXPENSES ARE DEBITED IN THE P & L ACCOUNT AS C ERTIFIED IN THE AUDIT REPORT. ALL THE EXPENSES WERE SCRUTINISED WHEN THE CASE WAS REOPENED FOR SCRUTINY AND NO SEPARATE DISALLOWANCE OF EXPENSES WERE MADE BY T HE ASSESSING OFFICER IN THE ASSESSMENT ORDER. 7. WE NOTICE THAT THE AO HAS REOPENED THE ASSES SMENT IN ORDER TO FIND OUT AS TO HOW THE ASSESSEE COULD EXPLAIN THE SOURCES/INVESTMENTS TO THE EXTENT OF RS.44 25 667/- WHEN THE CHEQUE RELATING TO THE SAME WAS FOUND EN-C ASHED IN THE SUCCEEDING YEAR SINCE THE ASSESSEE HAD SHOWN THE AMOUNT OF RS.44.25 LAKHS AS CASH RECEIPTS. HOWEVER WE NOTICE THAT THE ASSESSEE DID NOT FILE A NY CASH FLOW STATEMENT BEFORE THE AO IN ORDER TO EXPLAIN THE EXPENSES/INVESTMENTS. I NSTEAD THE ASSESSEE HAS REQUESTED THE AO TO CONSIDER THE COST OF MATERIALS/WORK-IN-PR OGRESS AS THE INVESTMENTS MADE OUT OF THE ABOVE AMOUNT. THE SAID EXPLANATION DEFIES T HE LOGIC. SINCE THE ASSESSEE DID NOT RECEIVE THE ABOVE SAID AMOUNT OF RS.44.25 LAKHS TH E QUESTION OF MAKING ANY INVESTMENT OUT OF THE SAME DOES NOT ARISE. THE ASSE SSEE WAS REQUIRED TO EXPLAIN THE SOURCES FOR THE EXPENSES/INVESTMENTS THAT HAVE ALRE ADY BEEN ACCOUNTED FOR BY HIM AND IT APPEARS THAT IT HAS NOT BEEN DONE. 8. WE NOTICE THAT THE LD CIT(A) HAS CALLED FOR A REMAND REPORT FROM THE AO DURING THE COURSE OF APPELLATE PROCEEDINGS. THE SPECIFIC Q UERY NO. (B) RAISED BY THE LD CIT(A) IN HIS LETTER DATED 13.02.2013 WAS WHETHER THE CAS H FLOW OF THE ASSESSEE EXPLAINED ALL . ITA. NO.398/COCH/2013 4 THE EXPENDITURES DEBITED TO THE P & L ACCOUNT. TH E AO HAS HOWEVER GIVEN THE REPLY AS UNDER:- EXPENSES ARE DEBITED IN THE P & L ACCOUNT AS CERTIF IED IN THE AUDIT REPORT. ALL THE EXPENSES WERE SCRUTINISED WHEN THE CASE WAS REO PENED FOR SCRUTINY AND NO SEPARATE DISALLOWANCE OF EXPENSES WERE MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THUS IT IS SEEN THAT THE AO DID NOT GIVE THE REPLY TO THE QUERY RAISED BY THE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY HAS PROCEEDED TO DELETE THE ADDITION WITHOUT APPRECIATING THAT THE AO HAS NOT GIVEN THE REPLY AB OUT THE CASH FLOW OF THE ASSESSEE. 9. THUS WE NOTICE THAT THE LD CIT(A) AS WELL A S THE AO IN HIS REMAND REPORT DID NOT CONSIDER THE CASH FLOW STATEMENT TO EXAMINE ABOUT T HE AVAILABILITY OF CASH FOR MEETING THE EXPENSES/INVESTMENTS THAT WERE ALREADY ACCOUNTE D FOR BY THE ASSESSEE. WE ALSO NOTICE THAT THE ASSESSEE HAS ALSO NOT FILED ANY CAS H FLOW STATEMENT BEFORE THE TAX AUTHORITIES. AT THE SAME TIME WE NOTICE THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION WITH THE PRESUMPTION THAT THE ASS ESSEE MIGHT NOT HAVE SOURCE TO THE EXTENT OF RS.44.25 LAKHS. IN THE ABSENCE OF C ASH FLOW STATEMENT AND EXPLANATION OF THE ASSESSEE WITH REGARD TO THE SOURCES WE ARE NOT IN A POSITION TO DECIDE THIS ISSUE. ACCORDINGLY IN OUR VIEW THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. ACCORDINGLY WE SET ASIDE THE ORDER OF LD CIT(A) AN D RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE AFRESH BY CALLING FOR EXPLANATIONS FROM THE ASSESSEE WITH REGARD TO THE S OURCES FOR MEETING THE EXPENSES/INVESTMENTS AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO CO-OPERATE WITH THE AO IN THIS REGARD. . ITA. NO.398/COCH/2013 5 10. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY ON 04-10-20 13. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 4TH OCTOBER 2013 GJ COPY TO: 1. SHRI RAJEEV THOMAS PWD CONTRACTOR NADUVANAD M ATTANNUR KANNUR-670 702. 2. THE INCOME TAX OFFICER WARD-2 KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II KOZH IKODE. 4. THE COMMISSIONER OF INCOME-TAX KOZHIKODE. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR ) I.T.A.T COCHIN